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Tesla returned to profitability in the third quarter after two periods of losses surprising Wall Street and sending shares higher in after-market trading, according to earnings reported after the market closed Wednesday.
The automaker third-quarter results included $143 million in net income, or 80 cents a share, compared with $311 million, or $1.82 a share, in the same year-ago period.
Tesla earned $342 million, or $1.91 a share, in the third quarter when adjusted for one-time items.
Analysts had expected a loss of 46 cents per share and revenue of $6.42 billion, according to data compiled by FactSet.
Tesla reported revenue of $6.3 billion, slightly lower than the $6.35 billion generated in the previous period and more than 7.5% lower than the same quarter last year.
But it was in line with analysts expectations.
Tesla said it is &highly confident& deliveries will exceed 360,000 deliveries this year.
The third-quarter report sent Tesla shares as high as 17% in after-market trading.
Tesla was also able to improve its automotive gross margins, an important sign of its financial health.
The automotive gross margin widened to 22.8% in the third quarter, from 18.9% in the previous period.
The automotive gross margin has not yet recovered to the 25.8% of the same quarter in 2018.
Tesla also reported free cash flow (operating cash flow less capital expenditures) of $371 million.
The company cash and cash equivalents balance increased to $5.3 billion.
&We continue to believe our business has grown to the point of being self-funding,& Tesla said in its earnings report.
The third-quarter report contained a number of positive signs for the automaker and marked a reversal from several consecutive quarters of losses.
Tesla said its factory in Shanghai is ahead of schedule and trial production has started.
The Model Y is also ahead of schedule, Tesla said.
Production of the Model Y is expected to begin by summer 2020.
Last quarter, Tesla reported a wider-than-expected loss of $408 million, or $2.31 per share, and generated $6.3 billion in revenue in the second quarter despite record deliveries of its electric vehicles.
Other important highlights from the third quarter:
The average selling price of Tesla vehicles have fallen.
Tesla noted that the mix of Model 3 variants had increased.
Automotive revenues were flat at $5.35 billion compared to the previous quarter.
The company was able to reach profitability in large part due to cost-cutting measures.
Operating expenses were 15% lower than the previous quarter.
Tesla said it plans to &gradually release nearly $500 million of accumulated deferred revenue tied to Autopilot and Full Self Driving features.&
Solar installations rebounded 48% to 43 megawatts in the third quarter.
However, installations are still 54% lower than the same period last year.
Energy storage deployments has continued to grow, reaching an all-time high of 477 MWh in the third quarter.
